Memo: Mount Shopify

A Youtuber and his production team ventured to Antarctica with the help of a luxury expedition service, endured temperatures so “frigid” that gloves were not needed, endured those mild conditions for 50 hours, claimed it was the most physically difficult thing he’s ever done, and then planted a Shopify flag after a four hour hike to a ridge. “This is now Shopify Mountain,” proclaimed MrBeast. The sponsored video was incredibly corny and overly-dramatic but no one can claim it didn’t have the intended effect.

Previous Report: Enter MrBeast

Jimmy “MrBeast” Donaldson is a brilliant marketer, creator, businessperson, and philanthropist. And the timing couldn’t be better for Shopify. The company could use a bit of savvy marketing, value creation, new business, and a bit of charity after a difficult year. In that way (and in only that way), the partnership made sense. Donaldson spent ample time praising Shopify in the 12 minute advertisement; it has now been viewed 61 million times since its December 24th publish. To put it in perspective, this is over 1/2 of the typical Super Bowl ad viewership for what I suspect was a fraction of the cost ($7M).

In an homage to an advertiser, after a hike up a rocky crest, the team plants a flag and proclaims the virgin peak to forever be known as Mount Shopify.

But while the MrBeast storefront is a mid-eight figure property ( estimates $45 million in annual revenue), I believe that Shopify is positioning itself for a year of emergence. 2023 will be the year of enterprise-level merchant for Shopify in its attempt to better the competition (namely Salesforce’s Commerce Cloud and Adobe’s Magento properties). Once known for appealing to consumers hoping to become the next MrBeast (merchandising-wise, at least), Shopify is becoming the go-to for major retailers, marketplaces, and brands a like. Thisi Shopify’s proverbial mountain to climb.

After a year that saw the stock tumble 74%, the Shopify is due to emphasize “quality” over quantity – a descriptor that I use, loosely, to describe its growing catalogue of those prized “larger-GMV” retailers. In the past year, a number of online-first brands have left their custom carts behind for greener pastures. One example is Supreme’s shift to Shopify:

Supreme is off to a fresh start for 2023. It has just been revealed by dropsgg that the brand has changed up its online store from its previous platform to Shopify‘s eCommerce service. This switch is said to have a better bot prevention system and will begin operation next week.

Another example is ButcherBox who is rolling out its Shopify conversion page by page, leaving its custom builds for outsourced support and more advanced tools. After announcing its $600 million year in publications like TechCrunch and How I Built This, the company also (quietly) confirmed this move. From an November 2022 Shopify Masters podcast:

To this day, ButcherBox partners with third-party farms, processing facilities, cutting facilities, distribution facilities, shipping, customer service, and tech. That’s a big reason the company uses Shopify for its online store.

So when Donaldson spent so much energy turning one of his 50 hour challenges into a Shopify advertisement, I assumed that it was an attempt to raise the temperature a bit before a much larger marketing push by the company. Time will tell what that marketing push looks like. But as a standalone, the impact has been effective enough. There’s even an attempt to name a Mount Shopify in Butwal, Nepal (at least one of the images used are from Donaldson’s Antarctica trip). Entire subreddits are devoted to the appeal (or disdain) for the video – a reaction that I imagine is rare for the notably likable Donaldson.

Shopify is overdue for its return to form. The company earned a record Black Friday and Cyber Monday, propelled by that growing catalogue of enterprise retailers. This equated to a 19% increase in sales over its 2021 marks. With $619 million in operating losses over 2022 with a $1 billion commitment to build out its Shopify Fulfillment Network, capturing larger retailers and their gross merchandising value is key to profitability moving forward. This is inline with its own forecasts for 2023.

MrBeast’s Shopify-sponsored video wasn’t his best work. But at an estimated 300,000 net new subscribers per day, I am sure that his passionate fans will forgive it. As for Shopify, the sponsored video served as a reminder that it has its own unique challenges ahead. Shopify is a financial services company as much as it is an eCommerce technologies provider. As low-brow as the native advertisement was, it brought awareness to perhaps one of the more undervalued publicly-traded companies.

For Shopify it’s all about GMV. Its approach to growing its maturing revenue streams is no longer just about the smaller merchants (to which MrBeast’s audience appeals) and the subscription revenue attributed to them. More than 30% of Shopify’s revenue was subscription-driven in 2022, according to sources. But I believe that the business model is evolving. Shopify Payments charges merchants 2.4-2.9% of the transaction, Shopify Capital is growing its lending products, and the point of sale system continues to appeal to omnichannel-friendly retailers.The more larger-GMV retailers on platform, the more that will use these higher-yield financial products.

Shopify needs a collection of nine figure online retailers to turn things around and remind investors that it will remain a large contributor to the future of commerce. That’s no small mountain to climb.

Update (1/3/2023): Shopify has launched “Commerce Components by Shopify” (CCS). Targeted to enterprise retailers, the company proclaimed via press release: “Shopify enters its next era of growth: redefining enterprise retail.” The technological stack allows for Shopify’s integration within existing systems. The ButcherBox example, mentioned above, is an example of this. The majority of the food retailer’s site remains custom while the gifting process is hosted by a third-party. Shopify adds:

Commerce Components by Shopify combines the best of both worlds for enterprise retailers: access to Shopify’s foundational, high-performing components that just work—like our checkout, which converts 72% better than a typical checkout, and 91% better on mobile—plus flexible APIs to build dynamic customer experiences that integrate seamlessly with a retailer’s preferred back office services.

A list of enterprise retailers that were just announced today include: Mattel, Glossier, JB Hi-Fi, Steve Madden, Spanx, and Staples.

By Web Smith | Art by Alex Remy

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